* For a manufacturing company, the cost of goods sold would include some variable costs, such as direct materials, direct labor, and variable overhead, and some fixed costs, such as fixed manufacturing overhead. Income statement formats for manufacturing companies will be explored in greater detail in a subsequent chapter. Cost of goods sold = Beginning merchandise inventory + Purchases - Ending merchandise inventory =$7,000+$3,000$4,000=$6,000 (a) What is the gross margin now? (b) What is the net operating income now? (c) What is the contribution margin now? 2. Suppose that sales are 29% higher as shown below: * For a manufacturing company, the cost of goods sold would include some variable costs, such as direct materials, direct labor, and variable overhead, and some fixed costs, such as fixed manufacturing overhead. Income statement formats for manufacturing companies will be explored in greater detail in a subsequent chapter. Cost of goods sold = Beginning merchandise inventory + Purchases - Ending merchandise inventory =$7,000+$3,000$4,000=$6,000 (a) What is the gross margin now? (b) What is the net operating income now? (c) What is the contribution margin now? 2. Suppose that sales are 29% higher as shown below